The Age of Business Consolidation In the period 1867-91, otherwise known as the MacDonald era, the government supported and encouraged the increased involvement of business. This is seen through the policy of defensive economic nationalism, the increased expansion westward, the fact that there even was a Pacific scandal, and the influence of railways on the Canadian west. Even in the late 1860s, following the U. S. civil war, the U. S. economy was still a major force. Canada felt that it was important to take steps to preserve their own national economy. The Canadian government decided to increase spending toward major national projects and partner with many businesses to increase their economic power.
Many people feared that the U. S. economy would simply take over Canada’s economy if there wasn’t direct intervention. This intervention was called defensive economic nationalism. The United States had much more farmland available than Ontario, the then farming center, could offer so it was only natural that the Canadian government would want to show people that there was still opportunity in farming, but it was westward.
There was also a great abundance of natural resources. However, there wasn’t a good way to get there. Covered wagons were quite slow, even though some settlers chose this option. This also wasn’t a good method to transport goods since there wasn’t much room on a wagon. Canada needed a way to transport goods from the west to the east efficiently and quickly. If they could do this it would also attract people to western Canada for settlement instead of out of the country to the United States for opportunity.
They would also have access to the important natural resources in Western Canada. The first attempts to build a Canadian Pacific Railway (CPR) dissolved in scandal. Businesses began to fight amongst themselves and many people were skeptical that a railroad could be built through 2,000 miles of rugged terrain, including the Rocky Mountains. Some thought it would cost more to build the railway than it would economically benefit the country. Sir John Macdonald, the Prime Minister received bribes in order to appoint the Montreal company, headed by Sir Hugh Allan, over the Toronto company that was vying for the project.
Allan had to end his ties to the U. S. to gain this contract. He would get a $30 million subsidy and a large land grant once the project, which was to extend from northern Ontario to the Pacific Ocean, was complete. It later came to light that Macdonald had received a huge sum of money from Allan which helped him win the election of 1872. Between the favoritism and the bribery, Sir John Macdonald was forced to resign. Macdonald returned to office in 1878 through a different party.
The railroad project took a new turn when George Stephen, the President of the Bank of Montreal, Donald Smith, previously the Canadian head of the Hudson’s Bay Company; and railroader James Hill, a Canadian expatriate with experience on the U. S. railways. The government provided them with a $25 million subsidy and 25 million acres of free land as well as government construction through the technically difficult sections. They also needed emergency loans to complete the project when they were close to becoming bankrupt near the end of construction in 1884 and 1885.
Despite this, the railway project was finally up and running and well on its way to completion. Once the railroad project was complete there was a tremendous increase in settlement and economic development in Western Canada. Winnipeg became a financial and manufacturing center. The railway influenced the placement for cities like Vancouver, Regina, and Calvary as well as other cities. Without the railway British Columbia’s foresting industry would not have taken off.
The railway also provided a great outlet for manufactured goods. Canada’s relationship with business during the Macdonald era was quite favorable. The railways were a major contributor to its success. This in turn created a boom in the economic output by creating a larger area to gain resources. Without the railway Western Canada would not be developed and the economic potential would not be realized. Sir John Macdonald supported businesses almost to a fault when he became involved with the Pacific Scandal.
Businesses developed incredibly with the introduction of the railroad and the favorable climate that the Macdonald era produced. Works Cited Anastakis, Dimitry. Auto Pact: Creating a Borderless North American Auto Industry 1960-1971. Toronto: University of Toronto Press, 2005. “Energy Policy. ” The Canadian Encyclopedia. 2009. Historica Dominion. 14 December 2009. Hinshaw, Randall. Ed. Stagflation: An International Problem. New York: Marcel Dekker Inc. 1977. Hoebing, Joyce et al. Ed. NAFTA and Sovereignty: Trade-offs for Canada, Mexico, and the United States.
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